Phoenix Business Journal: Starting a Business : Business Advice

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In order to understand why a down market createxs so many opportunities for astartul company, you first need to understand why a bull marker makes it so difficult to succeed. In a bull the cost of everything skyrockets. As more capital becomed available, so does more competition. New startup spring up everywhere, competingg for talent, marketing opportunities and customers. At one time you were the only game intown - now you'vwe got three guys pretending to do exactly what you do - all the whilre increasing the cost of running your business. Conversely, a bear markety drives the cost ofeverythinb downward.
Companies go into a panic, losingg sight of their growtbh goals and in some cases falling intobankruptcu altogether. The sudden drop in demaned forces the prices of everythingsharply downward, creatinfg a perfect storm for a well-prepared compang to create unprecedented gains. Before you get your offense you need to get your defense lined up and that means getting very lean very The problem with coming off of a bull markey isthat we're not used to pulling We're used to knowing that the next year will be even biggef than the last, so we plan and spen d accordingly. This time around, we've got to createw a very different plan.
This plan is aboug reducing staff, marketing and all possiblwe operating costs you have before circumstancess force such movesupon you. Make no this is going to Nobody is ever excitedabout downshifting, especiallg after a good run, but it'sx better than sending the entirr company home because you weren't ready to make changes. A healthy approach is to plan for a very long Assume you'll lose more sales than you can possibly forecast. Think of your business in terms of what it is your compan y can operate on and still keep thelights on. You can alwaysw add more resources if you need them butyou won't be able to make up for overshooting your incomse forecasts.
Kicking butt in a down market isn'rt just about crawling up in a hole and waitintgfor spring. It's about getting lean so you can get focusedd onhunting again. Your competitionb may not react as quickly asyou did, whicj is great news for you. Chances are their lack of planning is putting the company in atightt spot. Their senior management is more concernefd about making payroll than making Their foot soldiers are more worried about whether or not they are gointg to have jobs than whether their customers are as happy as theycan be. And that's where you swoop righy in.
There is never a more cost effectivde time to attack the competition and take over their customers than in a down The cost of advertising plummetws as the competition pulls The challenge of getting mediaz attention dwindles as fewer companies are vyinggfor attention. And the cost of wooinf customers drops as sales representatives go into adefensivde tailspin. In some cased you may not even have to attack their customers. As your competition pullsa back or goes outof business, you can let theirf customers come to you. Try that in a bull market.